The era has changed and this round of copycat season will be absent

Original Content | Odaily Planet Daily
Author | Golem


In previous bull market cycles, when mainstream coins like Bitcoin surged, the altcoin market would follow suit shortly thereafter. However, in this current cycle, times have changed, and even with Bitcoin experiencing significant gains, the altcoin market rally is not likely to materialize.
Odaily Planet Daily will analyze the impact of spot ETFs and the oversupply of altcoins from both perspectives.
Spot ETFs divert new inflows of this cycle
The emergence of Bitcoin spot ETFs may be altering the market structure. During past bull markets, the path for new inflows of capital was as follows: first entering major cryptocurrencies like Bitcoin and Ethereum, then spilling over into altcoins.
However, this bull market may be different. For new entrants, instead of investing in highly volatile cryptocurrencies, they may opt for a more familiar and traditional way to invest in crypto ETFs, naturally directing funds towards the more stable Bitcoin spot ETF.


Number of BTC held in Bitcoin spot ETF accounts (Source: CryptoQuant)
This shift may make it difficult for new capital to flow into altcoins, making it harder for them to appreciate. As jk, the author of Odaily Planet Daily, stated in “Data Extraction: ETFs are delaying the real bull market,” “The issuance of Bitcoin and Ethereum ETFs not only brings new capital into the market but also influences investor behavior, draining liquidity from the on-chain market; many retail investors and traders who are unfamiliar with cryptocurrencies, faced with the beginning of a bull market, are likely to directly invest in ETFs, leaving new projects with an audience that lacks users and a recognized technical narrative.”
Although crypto enthusiasts are hoping for institutions to introduce spot ETFs for altcoins, achieving this goal in this cycle seems challenging. Even BitMEX founder Arthur Hayes is, at most, cautiously optimistic, predicting that a Dogecoin ETF may be launched by the end of this cycle.
Oversupply of altcoins facing continuous selling pressure
The scarcity of new inflows of capital is just one aspect; another influencing factor is the large unlocking of new altcoins and VC selling pressure, resulting in the market supply of altcoins far exceeding demand.


Total market value of stablecoins (Source: Coingecko)
Starting from mid-April, the growth of stablecoin market value has slowed down, increasing by only about $500 million in two months, indirectly indicating that the growth of new capital inflows in the crypto industry has also slowed down. However, according to TokenUnlocks data, in June alone, tokens worth $800 million will be unlocked and enter the market, including mainstream projects such as dYdX, SUI, 1INCH, Ethena (ENA), Arbitrum (ARB), Aptos (APT), and Starknet (STRK).
The sudden influx of these newly unlocked tokens is bound to cause a stir in the market, especially in the scenario of slow growth of new capital inflows, where existing capital cannot absorb such a large token supply.
Furthermore, some early VCs have seen returns of more than 10 times on altcoins, and out of profit-taking needs or concerns about the future market, they will continue to sell in the market, ultimately causing a chain reaction, leading altcoin prices to inevitably decline.
As stated by Quinn Thompson, founder of crypto hedge fund Lekker Capital, in the next one to two years, approximately $30 billion in market capital will be needed monthly to cope with the supply inflation of altcoins. While some altcoins may still perform well, identifying these tokens will be more challenging than in previous cycles.
Overall, for all crypto investors, it is advisable not to overly anticipate the future altcoin market. This altcoin season may be absent this time around.